Hamilton Memorial Hospital District v. Toelle et al
Filing
123
ORDER granting in part and denying in part 82 Motion for Summary Judgment. Signed by Judge J. Phil Gilbert on 4/11/2014. (msd)
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
HAMILTON MEMORIAL HOSPITAL DISTRICT, an
Illinois governmental municipality,
Plaintiff/Counterdefendant,
No. 12-cv-1004-JPG-PMF
v.
APRIL TOELLE,
Defendant/Counterclaimant,
and
DEACONESS HOSPITAL, INC.,
Defendant.
MEMORANDUM AND ORDER
This matter comes before the Court on a joint motion for summary judgment on damages
filed by defendant/counterclaimant April Toelle and defendant Deaconess Hospital, Inc.
(“Deaconess”) (Doc. 82). Plaintiff/counterdefendant Hamilton Memorial Hospital District
(“HMH”) has responded (Doc. 93), and Toelle and Deaconess have replied to that response (Doc.
102).
This case began when Toelle, a physician, stopped working for HMH in the middle of a
three-year contract term to work for Deaconess instead. The Court refers to her employment
contract with HMH as the “Agreement.” HMH brings this suit for breach of contract against
Toelle and for tortious interference with contract against Deaconess. Toelle brings a
counterclaim against HMH for breach of contract and under the Illinois Wage Payment and
Collection Act (“IWPCA”), 820 ILCS 115 et seq., for failing to pay her according to her contract.
She also believes HMH’s failure to pay her properly excuses her failure to complete the contract
term. The details of this dispute are set forth in the Court’s April 7, 2014, order on the
defendants’ motions for summary judgment (Doc. 121). In that order, the Court granted
Deaconess’ motion for summary judgment, so the only parties remaining in this case are HMH and
Toelle, and the only claim remaining involves alleged breaches of Toelle’s employment agreement
with HMH.
Toelle asks for summary judgment on certain elements of damages HMH is claiming as a
result of Toelle’s departure before the end of her three-year contract term. Specifically, she
challenges amounts claimed for:
purchasing medical malpractice “tail insurance,” that is, post-employment insurance to
cover claims against Toelle for work she performed while working for HMH;
replacement physician recruiting;
signing bonus and moving expenses for the replacement physician;
advertising and marketing expenses to publicize the services of the replacement physician;
lost goodwill/lost revenue; and
continuing medical education (“CME”) expenses as well as salary and payroll taxes paid to
or on behalf of Toelle for the time of the CME course.
Summary judgment must be granted “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int’l-Ind.,
Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the
light most favorable to the nonmoving party and draw all reasonable inferences in favor of that
party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520
F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396.
The initial summary judgment burden of production is on the moving party to show the
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Court that there is no reason to have a trial. Celotex, 477 U.S. at 323; Modrowski v. Pigatto, 712
F.3d 1166, 1168 (7th Cir. 2013). Where the non-moving party carries the burden of proof at trial,
the moving party may satisfy its burden of production in one of two ways. It may present
evidence that affirmatively negates an essential element of the non-moving party’s case, see Fed.
R. Civ. P. 56(c)(1)(A), or it may point to an absence of evidence to support an essential element of
the non-moving party’s case without actually submitting any evidence, see Fed. R. Civ. P.
56(c)(1)(B). Celotex, 477 U.S. at 322-25; Modrowski, 712 F.3d at 1169. Where the moving
party fails to meet its strict burden, a court cannot enter summary judgment for the moving party
even if the opposing party fails to present relevant evidence in response to the motion. Cooper v.
Lane, 969 F.2d 368, 371 (7th Cir. 1992).
In responding to a summary judgment motion, the nonmoving party may not simply rest
upon the allegations contained in the pleadings but must present specific facts to show that a
genuine issue of material fact exists. Celotex, 477 U.S. at 322-26; Anderson, 477 U.S. at 256-57;
Modrowski, 712 F.3d at 1168. A genuine issue of material fact is not demonstrated by the mere
existence of “some alleged factual dispute between the parties,” Anderson, 477 U.S. at 247, or by
“some metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if “a
fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented.”
Anderson, 477 U.S. at 252.
The Court will address each of the challenged damage elements in turn.
I.
Tail Insurance
HMH contends it has incurred liability of $16,000 to provide tail insurance for Toelle after
she left HMH that it would not have had to incur had she stayed until the end of the Agreement’s
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term. Tail insurance would cover medical malpractice claims against Toelle that are made after
she left HMH based on her practice while she was employed by HMH. See Steven M. Harris, Tail
insurance: Who pays and when do you need it?, American Medical News (Mar. 5, 2007),
http://www.amednews.com/article/20070305/business/303059998/5/.
No reasonable jury would find Toelle liable for the cost of tail insurance. The Agreement
provides:
Tail Coverage. If this Agreement is terminated for any reason other than for Cause,
the Hospital will purchase a tail coverage insurance policy for professional liability
of Physician covering the employment period that physician was employed by the
Hospital. The cost of the tail policy will be paid by the hospital.
Agreement § 7.2. Under this provision, HMH is obligated to purchase tail insurance if Toelle left
her employment for any reason other than HMH’s decision to terminate the Agreement for cause,
as defined in the Agreement. HMH did not decide to terminate the Agreement for cause, so under
§ 7.2 of the Agreement, it is required to purchase tail insurance for Toelle. Furthermore HMH’s
chief executive officer, Randy Dauby, testified that HMH has not paid its insurer any money as a
result of Toelle’s leaving HMH and has not lost any money because of having to provide tail
coverage. The evidence further shows the cost of tail coverage is incalculable for an individual
doctor because it is based on the number of visits to a facility, not to a specific doctor, and because
it only goes into effect once the facility’s policy terminates. Because the Agreement provides
HMH will pay for tail insurance and because HMH has not suffered any damage by paying for tail
coverage as a consequence of Toelle’s departure, there is no basis for imposing on Toelle liability
for tail insurance. Toelle is entitled to summary judgment on this damage element.
II.
Physician Recruiting/Signing Bonus and Moving Expenses/Advertising and
Marketing
HMH seeks damages of more than $50,000 for the amounts it spent to recruit a physician to
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replace Toelle, the signing bonus and moving expenses it paid the replacement physician,
advertising and marketing expenses it paid to publicize the replacement physician’s decision to
join HMH, and other recruiting expenses. Toelle contends HMH began physician recruiting
efforts before she gave notice she would be leaving HMH so they could not have been caused by
her. She also argues HMH would have incurred some of these costs anyway a year later had she
stayed with HMH until the end of the Agreement’s term.
The Court has reviewed the evidence and believes there is a genuine issue of material fact
regarding whether some or all of these expenses were caused by Toelle’s departure before the end
of the Agreement’s term. Accordingly, summary judgment will be denied as to these elements of
damages.
III.
Lost Goodwill/Lost Revenue
HMH originally claimed $20,000 in lost goodwill and lost revenue. Toelle challenges
HMH’s ability to prove this amount of damages in light of its inability to point to any specific
patient that stopped coming to the HMH clinic because Toelle was not there. In response, HMH
has presented evidence to support calculation of a far higher amount of damages: $407,311.
However, in an October 17, 2013, order, the Court barred HMH from using such a calculation at
the trial of this case (Doc. 112). Because HMH declined to offer an alternative evidentiary basis
for its $20,000 original damage figure, there is no evidence in the record to support damages in this
amount for loss of goodwill and loss of revenue. Accordingly, Toelle is entitled to summary
judgment on this damage element.
IV.
CME Expenses
HMH seeks reimbursement of the $3,000 it paid for Toelle to complete a CME course in
May 2012 as well as the salary ($3,583) and payroll taxes ($274) it paid for the week she attended
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the course. Toelle attended the CME course after she signed an agreement to work for Deaconess
beginning in October 2012. HMH argues she attended the class for the benefit of her future
employment with Deaconess and not for HMH.
No reasonable jury could find Toelle liable for the cost of her CME course and the salary
and payroll taxes HMH paid while she attended the course. The Agreement provides:
Continuing Medical Education and Expense Allowance. The Physician will be
entitled to five (5) working days per calendar year for continuing medical education
and the Hospital will pay the actual cost of tuition, travel costs (coach airfare (or
comparable), train, or automobile) for Physician’s direct travel to and from the
location of the continuing medical education (provided that location is within the
48 contiguous states of the United States of America), and reasonable hotel and
meal expenses up to Three Thousand Dollars ($3,000.00) annually to underwrite
the costs of the Physician obtaining continuing medical education. Any expenses
in excess of $3,000.00 are Physician’s personal responsibility. Any exceptions to
the foregoing must be approved in writing, prior to the expenditure, by the
Hospital’s Chief Executive Officer.
Agreement § 5.10.
There is no evidence Toelle’s CME expenses did not fall within the category of CME
expenses for which the Agreement obligated HMH to pay. There is also no basis for recovery of
Toelle’s salary and payroll taxes for periods during which she was attending CME as allowed
under the Agreement. Toelle is entitled to summary judgment on this element of damages.
V.
Conclusion
For the foregoing reasons, the Court GRANTS in part and DENIES in part Toelle’s and
Deaconess’ joint motion for summary judgment (Doc. 82). The motion is GRANTED to the
extent it seeks summary judgment on the issue of damages for:
o tail insurance;
o lost goodwill/lost revenue; and
o CME expenses, including salary and payroll taxes.
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HMH shall not request or present evidence of the foregoing elements of damages at trial. The
motion is DENIED in all other respects.
IT IS SO ORDERED.
DATED: April 11, 2014
s/J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE
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